UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                    FORM 10-K

(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
     of 1934
For the fiscal year ended March 31, 1998
Commission File Number 1-5910

                              CARTER-WALLACE, INC.
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                    13-4986583
---------------------------------           -----------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

1345 Avenue of the Americas, New York, NY                  10105
-----------------------------------------                ----------
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:  212-339-5000

Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each exchange
         Title of each class                       on which registered
         -------------------                      ---------------------
            Common Stock
      Par value $1.00 per share                   New York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act:

                 Class B Common Stock, par value $1.00 per share
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                             Yes    X            No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K of any amendment to this
Form 10-K. (X)

The number of shares of the  registrant's  Common Stock and Class B Common Stock
outstanding at June 8, 1998 was 32,979,400 and 12,349,300, respectively.

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
registrant as of June 8, 1998 was approximately $392,706,000.

                       Documents Incorporated by Reference
                       -----------------------------------

      Annual Report to Stockholders for the fiscal
       year ended March 31, 1998                                 Parts I & II

      Proxy Statement for the Annual Meeting of
       Stockholders to be held July 21, 1998                     Parts III & IV


<PAGE>

                                     Part I


Item 1.   Business

Carter-Wallace, Inc. (the "Company") is engaged in the manufacture and sale of a
diversified line of products in the Consumer  Products and Health Care segments.
Additional  information  is  presented  on  page  11  "Description  of  Business
Segments"  of the 1998 Annual  Report to  Stockholders  and is herein  expressly
incorporated by reference.


Business Segments and Geographic Data

Financial information about the Company's business segments and geographic areas
for the three  years  ended  March  31,  1998 is  presented  on page 8 under the
caption "Net Sales and Earnings" and also on pages 25 and 26, note 14, "Business
Segments" of the Notes to Consolidated  Financial  Statements,  both included in
the 1998 Annual Report to  Stockholders  and herein  expressly  incorporated  by
reference.


Foreign Operations

Foreign operations are generally subject to certain political and economic risks
that  are  not   present  in  domestic   operations.   Such  risks  may  include
expropriation  of assets,  restrictions on earnings  remittances and fluctuating
exchange rates.  Changes in foreign  exchange rates had the effect of decreasing
sales by  $13,500,000  in the fiscal year ended March 31, 1998 in  comparison to
the prior year. Additional information is presented on page 18, note 4, "Foreign
Operations" of the Notes to Consolidated Financial Statements of the 1998 Annual
Report to Stockholders and is herein expressly incorporated by reference.


Competition

Both business  segments in which the Company operates are extremely  competitive
and include larger  corporations  with greater  resources for research,  product
development  and  promotion.  The  Company  competes  on  the  basis  of  price,
advertising,  promotion,  quality of product and other  methods  relevant to the
business.  In fiscal 1998, the Company's  "Arrid" line of  anti-perspirants  and
deodorants  is believed to have  accounted  for an  estimated  6.4% share of the
domestic  anti-perspirant  and deodorant market.  The "Trojan",  "Class Act" and
"Naturalamb" condom brands are estimated to have accounted for approximately 65%
of total domestic retail condom sales. The Company's worldwide condom sales were
approximately  $104,700,000,  $95,400,000  and  $98,700,000  in the fiscal years
ended March 31, 1998,  1997 and 1996,  respectively.  Additional  information is
presented  on page 8 under the  caption  "Net  Sales and  Earnings"  in the 1998
Annual Report to Stockholders and is herein expressly incorporated by reference.



                                        1

<PAGE>

Raw Materials

The Company's major raw materials are chemicals, plastics, latex, steel cans and
packaging  materials.  These  materials  are  generally  available  from several
sources and the  Company has had no  significant  supply  problems to date.  The
Company  generally has two or more approved  suppliers for production  materials
and issues  purchase  commitments  to provide its  suppliers  with adequate lead
time.


Patents and Licenses

The  Company  owns  or  is  licensed  under  a  number  of  patents  and  patent
applications  covering  several of its  products.  The  expiration  or any other
change in any of these patents or patent applications will not materially affect
the Company's business. Royalty income does not constitute a material portion of
total revenue.

In February  1998 the Company was issued a patent  (U.S.  Patent No.  5,714,389)
covering technology used in pregnancy,  ovulation and other diagnostic products.
The Company has commenced a program to license and enforce this patent.


Restructuring of Operations and Facilities

Information  regarding the Company's  restructuring of operations and facilities
is  presented  on page 9 under the  caption  "Restructuring  of  Operations  and
Facilities"  and on  page  24 in  note  13,  "Restructuring  of  Operations  and
Facilities" of the Notes to Consolidated Financial Statements,  both included in
the 1998 Annual Report to  Stockholders  and herein  expressly  incorporated  by
reference.


Felbatol (Felbamate)

Information regarding the effect of "Felbatol" matters on the Company's business
is presented on page 9 under the caption  "Felbatol  (Felbamate)" and on page 28
in note  17,  "Felbatol  (Felbamate)"  of the  Notes to  Consolidated  Financial
Statements,  both included in the 1998 Annual Report to Stockholders  and herein
expressly incorporated by reference.


Environmental Matters

Information  regarding  environmental matters is presented on pages 28 and 29 in
note  19,  "Litigation  Including   Environmental   Matters"  of  the  Notes  to
Consolidated  Financial  Statements,  included  in the  1998  Annual  Report  to
Stockholders and herein expressly incorporated by reference.



                                        2

<PAGE>

Research and Development

Expenditures  for  research  and  development   totaled   $28,785,000  in  1998,
$27,284,000 in 1997 and $26,494,000 in 1996.  Research and development  expenses
in 1998  increased  $1,501,000  or 5.5% as a result  of higher  spending  in the
Consumer  Products segment due in part to employee  termination costs related to
organizational  changes.  Research  and  development  expense in the Health Care
segment was lower than the prior year. In 1997 research and development expenses
increased by $790,000 or 3.0% from the prior year as a result of higher spending
in the Consumer Products segment,  partly offset by lower spending in the Health
Care segment.

Research  and  development  of  "Taurolin"  (taurolidine)  for the  treatment of
vancomycin  resistant  enterococcal  infection has continued through independent
research facilities managed by the Company's internal supervisory personnel.

The "Astelin" Nasal Spray New Drug Application  ("NDA") was approved on November
4,  1996  and the  product  was  launched  on  March  10,  1997.  The  "Astelin"
(azelastine)  tablet NDA for rhinitis is pending at the FDA. The Company has not
yet decided whether to seek final approval for this NDA.

In April 1998 a large scale,  multi-centered clinical efficacy trial for the use
of  "Taurolin"  intravenously  in  treating  sepsis was  terminated  when it was
determined  that the results did not support  efficacy.  "Taurolin"  research in
other  areas,  such  as  vancomycin  resistant  enterococcal  infection,  is not
affected by the termination of the sepsis trial.

Approximately 130 employees are employed in research and development activities.


Employees

The Company, together with its subsidiaries, employed approximately 3,360 people
worldwide at March 31, 1998.


Discontinuation of the Organidin (Iodinated Glycerol) Product Line

Information  regarding the effect of  discontinuing  the "Organidin"  (iodinated
glycerol) product line is presented on page 9 under the caption  "Discontinuance
of the Organidin  (Iodinated  Glycerol) Product Line" and on page 28 in note 18,
"Discontinuance of the Organidin (Iodinated Glycerol) Product Line" of the Notes
to Consolidated Financial Statements, both included in the 1998 Annual Report to
Stockholders and herein expressly incorporated by reference.


Acquisitions

Information  regarding  acquisitions  is  presented  on  page  24  in  note  10,
"Acquisitions" of the Notes to Consolidated  Financial  Statements,  included in
the 1998 Annual Report to Stockholders and is herein  expressly  incorporated by
reference.


                                        3

<PAGE>

Item 2.   Properties

The executive offices of the Company are located at 1345 Avenue of the Americas,
New York, New York, in space leased until May, 2011. A portion of this space has
been subleased. The following are the other principal facilities of the Company:

                                                                   Area
Location                   Products Manufactured                (Sq. Feet)

Owned in Fee:
-------------
Manufacturing Facilities
 and Offices:

Cranbury, New Jersey       Pharmaceuticals, toiletries
                            and pet products                      734,000
Colonial Heights,
 Virginia                  Condoms                                200,000
Decatur, Illinois          Pharmaceuticals and Pet Products       108,000
Winsted, Connecticut       Pet products                            45,000
Montreal, Canada           Pharmaceuticals                        157,000
Folkestone, England        Toiletries                              76,000
Milan, Italy               Pharmaceuticals and diagnostics         52,000
Pisa, Italy                Toiletries, adhesive tapes
                            and bandages                           49,000
Mexico City, Mexico        Pharmaceuticals and diagnostics         63,000
New Plymouth, New Zealand  Condom processing                       31,000

Warehouse and Offices:

Toronto, Canada                                                    52,000

Leased:
-------
Manufacturing Facilities and Offices:

Santa Ana, California      Toiletries                              10,400
Mexico City, Mexico        Toiletries                              56,000
Barcelona, Spain           Toiletries                              58,400
Milan, Italy               Diagnostics                             19,000

Warehouse and Offices:

Dayton, New Jersey                                                200,000
Momence, Illinois                                                  43,000
Plainsboro, New Jersey *                                           23,300
Sydney, Australia                                                  19,000
Folkestone, England                                                50,000
Levallois, France *                                                20,400
Revel, France                                                      36,000


*  Offices only


                                        4

<PAGE>

The Company has  agreements  with several  agents  throughout  the world for the
manufacture of certain products to its  specifications.  The Company has several
other short-term  leases for manufacturing  plants,  warehousing space and sales
offices.  In April,  1997,  the Company  reopened its New Plymouth,  New Zealand
facility.  With minor  exceptions,  all other facilities are operating at normal
capacity.


Item 3.   Legal Proceedings

Information  regarding Legal  Proceedings  involving the Company is presented on
pages 28 through 31 in note 19, "Litigation Including  Environmental Matters" of
the Notes to  Consolidated  Financial  Statements,  included  in the 1998 Annual
Report to Stockholders and herein expressly incorporated by reference.


Item 4.   Submission of Matters to a Vote of Security Holders

Not applicable.







                                        5

<PAGE>

Executive Officers of the Registrant *
------------------------------------

Executive Officers of the Registrant are as follows:

                                                                    Held Present
Name                    Age    Office                               Office Since
----                    ---    ------                               ------------
Henry H. Hoyt, Jr.       70    Chairman of the Board and
                                Chief Executive Officer                   1974

Ralph Levine             62    President and Chief Operating Officer      1997

Paul A. Veteri           56    Executive Vice President and
                                Chief Financial Officer                   1997

T. Rosie Albright        51    Vice President, Consumer Products, U.S.    1995

John Bridgen, Ph.D.      51    Vice President, Diagnostics, U.S.          1984

Donald R. Daoust, Ph.D.  62    Vice President, Quality Control            1978

Peter J. Griffin         55    Vice President and Controller              1983

Adrian J. L. Huns        50    Vice President, International              1996

Michael J. Kopec         58    Vice President, Manufacturing              1978

Stephen R. Lang          63    Vice President, Secretary and
                                General Counsel                           1997

Thomas B. Moorhead       64    Vice President, Human Resources            1987

Herbert Sosman           65    Vice President, Pharmaceuticals, U.S.      1984

C. Richard Stafford      62    Vice President, Corporate Development      1977

James L. Wagar           63    Vice President and Treasurer               1981

Mark Wertlieb            42    Vice President, Taxes                      1996



Each  officer  holds  office  until the first  meeting of the Board of Directors
following  each Annual Meeting of the  Stockholders  and until his successor has
been duly elected and  qualified  (except that the Board of Directors may at any
meeting  elect  additional  officers),  unless  his term is  earlier  terminated
through death, resignation, removal or otherwise. The next Annual Meeting of the
Stockholders is scheduled to be held July 21, 1998.

*  All executive officers have held their present office for the last five years
   except those noted on the following page.




                                        6

<PAGE>



Executive Officers of the Registrant (Cont'd)
------------------------------------

Ralph Levine was appointed President and Chief Operating Officer in April, 1997.
Mr. Levine was previously  Vice  President,  Secretary and General Counsel since
prior to 1993 until April, 1997.

Paul A.  Veteri was  appointed  Executive  Vice  President  and Chief  Financial
Officer,  in April,  1997.  Mr. Veteri was  previously  Vice President and Chief
Financial Officer since prior to 1993 until April, 1997.

Stephen  R. Lang was  appointed  Corporate  Vice  President  in March,  1997 and
Secretary and General Counsel in April,  1997. Mr. Lang was previously a Partner
and Chairman of the  Litigation  Department of Whitman,  Breed,  Abbott & Morgan
since prior to 1993 until March, 1997.

Mark Wertlieb was appointed Corporate Vice President, Taxes in August, 1996. Mr.
Wertlieb  was  previously  a Tax Partner at KPMG Peat Marwick LLP since prior to
1993 until August, 1996.

T. Rosie Albright was appointed  Corporate Vice  President,  Consumer  Products,
U.S. and President,  Carter Products Division,  in December,  1995. Ms. Albright
was previously  General Manager and Executive Vice  President,  Beauty Care with
Revlon, Inc. since 1993.

Adrian J. L. Huns was appointed  Corporate  Vice  President,  International  and
President,  International  Division in May, 1996. Mr. Huns was Managing Director
of  Carter-Wallace  Ltd., a subsidiary of  Carter-Wallace,  Inc., since prior to
1993 until May, 1996.


                                     Part II
                                     -------

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters

Information  required  by this  item is  presented  on pages 1 and 7 of the 1998
Annual Report to Stockholders and is herein expressly incorporated by reference.

Item 6.   Selected Financial Data

Information  required by this item is incorporated herein by reference to page 7
of the 1998 Annual Report to Stockholders.

Item 7.   Management's Discussion and Analysis of Results
           of Operations and Financial Condition

Information required by this item is incorporated herein by reference to pages 8
through 10 of the 1998 Annual Report to Stockholders.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.



                                        7

<PAGE>



                                    Part III
                                    --------

Item 8.   Financial Statements and Supplementary Data

Information  required by this item is incorporated  herein by reference to pages
12 through 32 of the 1998 Annual Report to Stockholders.

Item 9.   Disagreements on Accounting and Financial Disclosure

Not applicable.

Item 10.  Directors and Executive Officers of the Registrant

Information  with  respect  to  Directors  of the  Company  is  incorporated  by
reference to the Company's Proxy Statement,  dated June 24, 1998, for the Annual
Meeting of  Stockholders  to be held July 21, 1998,  under the  captions  "Stock
Ownership", "Election of Directors" and "Board of Directors and Committees".

Information  with respect to Executive  Officers of the  Registrant is set forth
under the heading  "Executive  Officers of the  Registrant" in Part I on pages 6
and 7 of this Form 10-K.

Item 11.  Executive Compensation

Information  required by this item is  incorporated  herein by  reference to the
Company's  Proxy  Statement,  dated June 24,  1998,  for the  Annual  Meeting of
Stockholders to be held July 21, 1998, under the caption "Executive Compensation
and Other Information".

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Information  pertaining to the security  ownership of certain  beneficial owners
and  management  is  incorporated  herein by  reference to the  Company's  Proxy
Statement,  dated June 24, 1998,  for the Annual Meeting of  Stockholders  to be
held July 21, 1998, under the captions "Voting Rights" and "Stock Ownership".

Item 13.  Certain Relationships and Related Transactions

Information  required by this item is  incorporated  herein by  reference to the
Company's  Proxy  Statement,  dated June 24,  1998,  for the  Annual  Meeting of
Stockholders  to  be  held  July  21,  1998,  under  the  caption  "Election  of
Directors".

                                     Part IV
                                     -------

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K

(a)(1),(a)(2) Financial Statements and Financial Statement Schedule

The financial  statements and financial statement schedule filed as part of this
report are  listed or  incorporated  by  reference  in the  "Index of  Financial
Statements and Financial Statement Schedule" on page 14 of this Form.




                                        8

<PAGE>



(a) (3)  Exhibits

          3.1  Certificate  of  Incorporation,   as  amended,   of  the  Company
               (incorporated herein by reference to Exhibit 3.1 of the Company's
               Annual  Report on Form 10-K for the fiscal  year ended  March 31,
               1992).

          3.2  By-Laws of the Company, as amended through 5/15/97.

         10.2  1977 Restricted Stock Award Plan, as amended (incorporated herein
               by reference to Exhibit 10.2 of the  Company's  Annual  Report on
               Form 10-K for the fiscal year ended March 31, 1990).

         10.3  Employees'  Retirement Plan, as amended  (incorporated  herein by
               reference to Exhibit 10.3 of the Company's  Annual Report on Form
               10-K for the fiscal year ended March 31, 1993).

         10.4  Profit  Sharing  Plan  (incorporated  herein by  reference to the
               description  of  such  plan  set  forth  in the  Company's  Proxy
               Statement  dated  June  18,  1993,  for  the  Annual  Meeting  of
               Stockholders  to  be  held  July  20,  1993,  under  the  caption
               "Executive Compensation and Other Information").

         10.5  Executives' Additional  Compensation Plan (incorporated herein by
               reference  to the  description  of such  plan  set  forth  in the
               Company's  Proxy  Statement  dated June 18, 1993,  for the Annual
               Meeting  of  Stockholders  to be held  July 20,  1993,  under the
               caption "Executive Compensation and Other Information").

         10.6  Employment Agreement, dated June 4, 1998, between the Company and
               Ralph Levine.

         10.7  Employment Agreement, dated June 4, 1998, between the Company
               and Paul A. Veteri.

         10.8  Employment Agreement,  dated April 15, 1997 and effective October
               31, 1997,  between the Company and Herbert  Sosman  (incorporated
               herein by  reference  to  Exhibit  10.8 of the  Company's  Annual
               Report on Form 10-K for the fiscal year ended March 31, 1997).

        10.10  Supplemental  Death Benefit Agreement,  as amended  (incorporated
               herein by  reference  to Exhibit  10.10 of the  Company's  Annual
               Report on Form 10-K for the fiscal year ended March 31, 1993).

        10.11  Lease Agreement,  dated December 2, 1988, between the Company and
               Fisher  -  Sixth  Avenue   Company  and  Hawaiian   Sixth  Avenue
               Corporation (incorporated herein by reference to Exhibit 10.10 of
               the  Company's  Annual  Report on Form 10-K for the  fiscal  year
               ended March 31, 1989).


                                   (Continued)


                                        9

<PAGE>



(a) (3) Exhibits (cont'd)

        10.12  Corporate    Officer   Medical   Expense    Reimbursement    Plan
               (incorporated  herein  by  reference  to  Exhibit  10.12  of  the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               March 31, 1993).

        10.13  Executive   Medical  Expense   Reimbursement   Plan,  as  amended
               (incorporated  herein  by  reference  to  Exhibit  10.13  to  the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               March 31, 1993).

        10.14  Executive Pension Benefits Plan, as amended  (incorporated herein
               by reference to Exhibit 10.14 of the  Company's  Annual Report on
               Form 10-K for the fiscal year ended March 31, 1995).

        10.15  Executive  Savings  Plan  (incorporated  herein by  reference  to
               Exhibit 10.15 of the Company's Annual Report on Form 10-K for the
               fiscal year ended March 31, 1994).

        10.16  Amendment to Revolving Credit  Agreement,  dated as of October 1,
               1995 (incorporated herein by reference to the Company's Quarterly
               Report on Form 10-Q for the quarter ended September 30, 1995).

        10.17  Note Agreement, dated as of December 1, 1995 (incorporated herein
               by reference to the Company's  Quarterly  Report on Form 10-Q for
               the quarter ended December 31, 1995).

        10.18  1996 Long-Term  Incentive Plan (incorporated  herein by reference
               to the  description  of such  plan  set  forth  in the  Company's
               Consent Solicitation Statement,  furnished to its Stockholders on
               January 22, 1996, under the caption "Carter-  Wallace,  Inc. 1996
               Long-Term Incentive Plan").

        10.19  Employment  Agreement,  dated  September  11,  1996,  between the
               Company and T. Rosie Albright  (incorporated  herein by reference
               to Exhibit 10.19 of the Company's  Annual Report on Form 10-K for
               the fiscal year ended March 31, 1997).

        10.20  Consulting  Agreement,  dated July 15, 1996,  between the Company
               and Daniel J. Black (incorporated  herein by reference to Exhibit
               10.20 of the Company's  Annual Report on Form 10-K for the fiscal
               year ended March 31, 1997).

         13    Annual Report to Stockholders for the fiscal year ended March 31,
               1998.


                                   (Continued)




                                       10

<PAGE>



Exhibits (cont'd)

         21    Subsidiaries.

         23    KPMG Peat Marwick LLP Accountants' Consent

         27    Financial Data Schedule (EDGAR filing only)

(b)     Reports on Form 8-K

              No reports on Form 8-K have been filed  during the  quarter  ended
              March 31, 1998.


                                       11

<PAGE>



                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.


                                                CARTER-WALLACE, INC.
                                                     (Registrant)



DATED:  June 17 1998                           BY: /s/ Ralph Levine
        ------------                               ---------------
                                                    Ralph Levine
                                                    President and Chief
                                                     Operating Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the respective dates indicated:

SIGNATURE                     TITLE                         DATE


/s/Henry H. Hoyt, Jr.         Chairman of the Board and     June 17, 1998
---------------------         Chief Executive Officer,
Henry H. Hoyt, Jr.            Director (Principal Execu-
                              tive Officer)



/s/Daniel J. Black            Director                      June 17, 1998
---------------------
Daniel J. Black



/s/David M. Baldwin           Director                      June 17, 1998
---------------------
David M. Baldwin



/s/Dr. Richard L. Cruess      Director                      June 17, 1998
------------------------
Dr. Richard L. Cruess



/s/Suzanne H. Garcia          Director                      June 17, 1998
----------------------
Suzanne H. Garcia



                                       12

<PAGE>

SIGNATURE                     TITLE                         DATE



/s/Scott C. Hoyt              Director                      June 17, 1998
-----------------------
Scott C. Hoyt



/s/Ralph Levine               President and Chief           June 17, 1998
-----------------------       Operating Officer,
Ralph Levine                  Director
                              



/s/Herbert M. Rinaldi         Director                      June 17, 1998
------------------------
Herbert M. Rinaldi



/s/Paul A. Veteri             Executive Vice President      June 17, 1998
--------------------------    and Chief Financial Officer,
Paul A. Veteri                Director (Principal Financial
                              Officer)
                              



/s/Peter J. Griffin           Vice President and            June 17, 1998
--------------------------    Controller (Principal
Peter J. Griffin              Accounting Officer)

                              

                                       13

<PAGE>



                      CARTER-WALLACE, INC. AND SUBSIDIARIES

         INDEX OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE





The  consolidated  financial  statements  and the  related  report  of KPMG Peat
Marwick  LLP dated  May 7, 1998  appearing  on pages 12  through  32 of the 1998
Annual Report to Stockholders are incorporated  herein by reference in this Form
10-K Annual Report.

The following are set forth in this Annual Report on Form 10-K:


                                                                  Page

INDEPENDENT AUDITORS' REPORT ON SUPPORTING FINANCIAL
 STATEMENT SCHEDULE                                                15

SCHEDULE II  - Valuation and qualifying accounts for each
                of the three years ended March 31, 1998            16



All  other  financial  statement  schedules  are  omitted  because  they are not
applicable  or not  required  or because  the  information  is  included  in the
consolidated financial statements or related notes.

                                       14

<PAGE>



                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
Carter-Wallace, Inc.:


Under date of May 7, 1998,  we reported on the  consolidated  balance  sheets of
Carter-Wallace,  Inc. and  subsidiaries  as of March 31, 1998 and 1997,  and the
related consolidated statements of earnings and retained earnings and cash flows
for each of the  years  in the  three-year  period  ended  March  31,  1998,  as
contained  in  the  1998  Annual  Report  to  Stockholders.  These  consolidated
financial statements and our report thereon are incorporated by reference in the
Annual Report on Form 10-K for the year 1998.  In connection  with our audits of
the aforementioned  consolidated financial statements,  we also have audited the
related financial  statement schedule as listed in the accompanying  index. This
financial statement schedule is the responsibility of the Company's  management.
Our responsibility is to express an opinion on this financial statement schedule
based on our audits.

In our opinion,  such financial statement schedule,  when considered in relation
to the  basic  consolidated  financial  statements  taken as a  whole,  presents
fairly, in all material respects, the information set forth therein.





                                                    KPMG PEAT MARWICK LLP




New York, New York
May 7, 1998






                                       15

<PAGE>



                                   SCHEDULE II
                      CARTER-WALLACE, INC. AND SUBSIDIARIES

                        Valuation and Qualifying Accounts
                        Three Years Ended March 31, 1998
                            (in thousands of dollars)

<TABLE>
<CAPTION>
                           Balance at  Charged to  Charged                Balance
                           beginning   costs and   to other               at end
Description                of period    expenses   accounts  Deductions  of period
----------------------     ----------  ----------  --------  ----------  ---------
<S>                        <C>         <C>         <C>      <C>         <C>    
Year ended March 31, 1998:

  Deducted from assets 
   to which they apply:
    Allowance for
     doubtful accounts       $ 5,314    $ 1,134     $   -    $   732 (a)    $ 5,716
    Allowance for cash
     discounts                 1,416      8,741         -      8,567 (b)      1,590
                             -------    -------     ------   -------        -------
                             $ 6,730    $ 9,875     $   -    $ 9,299        $ 7,306
                             -------    -------     ------   -------        -------

Year ended March 31, 1997:

  Deducted from assets 
   to which they apply:
    Allowance for
     doubtful accounts       $ 5,358    $ 1,182 (c) $   -    $ 1,226 (a)(c) $ 5,314
    Allowance for cash
     discounts                 1,358      8,048         -      7,990 (b)      1,416
                             -------    -------     ------   -------        -------
                             $ 6,716    $ 9,230     $   -    $ 9,216        $ 6,730
                             -------    -------     ------   -------        -------

Year ended March 31, 1996:

  Deducted from assets 
   to which they apply:
    Allowance for
     doubtful accounts       $ 4,827    $ 1,090     $   -    $   559 (a)    $ 5,358
    Allowance for cash
     discounts                 1,517      8,381         -      8,540 (b)      1,358
                             -------    -------     ------   -------        -------
                             $ 6,344    $ 9,471     $   -    $ 9,099        $ 6,716
                             -------    -------     ------   -------        -------
  Reserve for Property
   Plant and Equipment       $14,308    $16,026     $   -    $30,334 (d)    $    -
                             -------    -------     ------   -------        -------

<FN>
Notes:

(a)  Accounts written off and recovered.
(b)  Net discounts allowed to customers.
(c)  Includes $508 related to trade receivables from a wholesaler who filed for
      bankruptcy.
(d)  Reserves applied against related assets.

</TABLE>


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